Financial Review July 2015

Victims mainly go uncompensated for phone call bank fraud
People who are the victims of so-called ‘vishing’ scams cannot rely on their bank to compensate them. In nearly two-thirds of cases the Financial Ombudsman found that banks were not responsible for the losses. It looked at 200 examples of the telephone fraud, in which account holders lost up to £100,000 each, but it ruled the bank was liable for those losses in only 37% of cases. In the others customers were deemed to have effectively given their own money away.

Vishing, or voice phishing, is when fraudsters phone up, posing as the police or the victim’s bank. Last year the scam cost customers £24 million, according to Financial Fraud Action. Usually the fraudsters persuade their victims to move money from their account. Often they do this by telling customers to phone their bank immediately, but the fraudster stays on the line, tricking the victim into thinking they are talking to their bank.

Asia passes Europe to go second to USA in world wealth league
Asia has overtaken Europe as the world’s second-richest region, according to the annual report by the Boston Consulting Group. The Asia Pacific region, excluding Japan, held £30 trillion in private wealth last year as the number of new millionaires rose in China and India. North America is the world’s richest region, but is expected to be overtaken by Asia in 2016. Asia is also projected to hold 34% of global wealth by 2019.

Overall, global private financial wealth grew by nearly 12% in 2014, thanks to strong gains in stock and bond markets. Analysts say there is now an old versus new world dynamic, with the so-called new world economies growing at the faster pace, albeit from a lower base. As in both 2012 and 2013, Asia-Pacific remained the fastest-growing global region in 2014. The US dominates the rankings, with 53 businesses in the index, up from 47 after the financial crisis. China beats the UK into second place, with 11 businesses making the ranking, compared with the UK’s eight.

It’s less likely to be you as Lotto jackpot odds are lengthened
National Lottery operator, Camelot, is to alter the rules of its Lotto game and says it will give players better odds of becoming a millionaire. Changes from October include the introduction of a Millionaire’s Raffle. But despite the spin, mathematicians say the odds of winning any of the other prizes will be reduced. This is because under the new rules, the pool of numbers that players have to choose from will increase from 49 to 59. If people choose six numbers up to 49, the odds of winning the jackpot are just under one in 14 million. These odds will lengthen to around one in 45 million when the new changes come into play. Camelot says the new approach will guarantee at least two millionaires each week in addition to 20 winners of £20,000 in every draw.

Phones are preferred banking tool
Banking on smartphones is set to be more popular than using a computer to bank, according to the British Bankers Association. It says customers will check their current accounts 895 million times on their mobiles in 2015. This will outstrip 705m checks on computers, 427m branch visits, and 64m telephone calls. Five years ago, internet banking from a computer was the most popular. Then customers checked accounts 565m times on their computer, 502m times at a branch, and only 86m times on mobile phones.

“Technology’s changing our lives and banking’s no different. The rapid take-up of apps and mobile banking appears to be a real game changer,” said Anthony Browne of the BBA.

Bank of England’s pay raises some eyebrows
The Bank of England has been accused of hypocrisy over the need for public sector pay restraint after it emerged that 141 of its staff are paid more than the Prime Minister. The lavish pay packages, which include basic salary and perks such as medical insurance, are revealed in its annual report.

The Governor, Mark Carney, was the highest paid, receiving £879,773, including a housing allowance worth more than a quarter of a million pounds. But even the Bank’s chief of public relations received more than the £142,500 paid to David Cameron. Despite working only four days a week, the former BBC journalist picked up £163,371 in pay and benefits. The bank’s human resources director was awarded a total of £191,037, including a basic salary of £162,180 – but she at least works a full five-day week.

The bank of mum and dad never closes
With the cost of toys, schooling and pocket money all safely behind them, older parents might think their days of forking out for their children are over, but financial support lasts well into adulthood, with almost a quarter of over-65s owed money by their grown-up offspring. The average amount owed is around £3,100, but one in 10 said the outstanding debt was more than £5,000. On top of this financial generosity, one in eight parents said they also had adult children or even grandchildren living with them.

The findings come at a time when many older people have easier access to their savings. Since April, over-55s have been able to cash in all or part of their pension pots rather than being required to buy a regular annuity income, but now it seems adult children may be looking for a share of those savings.

EU phone home – mobile roaming charges to be abolished by June 2017
People travelling abroad in the EU will soon no longer face extra charges to use their mobile phones. All mobile phone users throughout the EU will be able to make calls, send text messages and go online wherever they are without facing extra charges. Anyone on a phone contract with a monthly allowance for texts, minutes or data will be able to use their plan even while they are travelling.

The new rules, due to come into force in June 2017, will also put an end to ‘bill shock’ suffered for years by unsuspecting mobile phone users who fail to realise the scale of the roaming fees they face if they do not turn their phone to ‘data off when roaming’. The changes follow months of negotiations by the European Commission to agree a Digital Single Market deal with countries and phone providers. This only applies in EU Member States so the problem of big roaming fees will continue elsewhere.

Grousing spouses add to rise in tax rewards
Payments to tax informants rose by 50% over the past year. In 2014-15 a record £600,000 was paid to people who had reported suspected tax dodges by calling the HM Revenue & Customs (HMRC) confidential telephone hotline. This is being put down to increased efforts by HMRC and to greater public awareness about the hotline.

The majority of people who report the tax affairs of others are thought to be bitter ex-wives and husbands or former work colleagues. This would suggest their main motive is not financial. A reward of between £50 and £1,000 is often given, but only if the information delivers a big win from a wealthy individual. The hotline for tax informants was set up in April 2006. HMRC says the majority of people who provide information do so without any expectation of a financial reward.

It’s a wrap as inventor wins £44,500 payout
Small business owner, Mike Edwards, has won a £44,500 payout from HMRC following a two-year battle over whether his Snugglebundl baby-lifting wrap – a shawl with handles for lifting babies and putting them down without waking the child – is zero-rated for VAT. Mr Edwards, who taught himself VAT law to represent his own company, has called the case ridiculous and attacked the VAT Office over its handling of the issue. “It was a waste of our time and an abuse of a small company,” he said.

The row centred over whether the company’s flagship product was a blanket or baby-wear. Consumers pay no VAT on essential products but must pay it on other items. After his long battle with HMRC, endless hearings and tribunals, Mr Edwards urged the Government to consider appointing an arbitrator to resolve disputes between small companies and a behemoth such as HMRC.

Farmland outshines London property
The average price of English farmland has almost trebled over the past 10 years, beating the FTSE 100 index and the soaring central London property market. Data from Knight Frank’s latest Farmland Index shows the value of bare farmland rose by 2.6% between April and June, and by 33%, or £2,050 per acre, since the end of 2012. This is the 10th consecutive quarter of growth in the sector, with prices now at a record high of £8,265/acre. The average cost of a central London home has slightly more than doubled over the last decade.

Knight Frank has warned that local and national price fluctuations mean it is becoming increasingly difficult to value specific blocks of land. Prices start at around £5,000/ acre, soaring to £15,000 for larger pockets of arable land in some areas of England. The availability of land remains low, prompting buyers and investors to look further afield to Wales and the North of England to find a good deal on larger pockets of better quality land.

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